This phrase is a MUST READ. Now you know and believe smile emoticon In this article, traders mean Manipulator hired by Banks indirectly! .................................................................................................................................. If traders in the chat room had net orders in the same direction as what they desired rate movement at the fix to be, then the traders would at times either (1) match off these orders with traders outside of the chat room in an attempt to reduce the volume of orders in the opposite direction transacted during the fix period; (2) transfer their orders to a single trader within the chat room who could then execute a single order during the fix period; or (3) transact with traders outside of the chat room to increase the volume traded by chat room members during the fix window in the direction favored by the private chat room traders. At times, traders also increased the volume traded by them at the fix in the direction favored by the chat room traders in excess of the volume necessary to manage the risk associated with their banks’ net buy or sell orders at the fix. Focus on the numbered alternatives. Lets say that the chat room traders are selling euros to customers at the fix, so they want a high fix. They want to buy a lot of euros in the few minutes right before the fix, to push the price up. They know their buddies are on board with that plan. They dont know if other banks are on board with it though. So they have three alternatives:11 Try to net off with outside banks (buy from them at the fix), so that the chat room traders have fewer euros to buy, but those outside banks have fewer to sell. Just hang out in the chat room and dont deal with outside banks. Try to increase their positions using outside banks (sell to them at the fix), so that the chat room traders have more euros to buy in those last few minutes, but the outside banks have more to sell. Notice that 1 and 3 are opposites! Banks could further their manipulation by buying from outside banks, selling to outside banks, or doing neither. This should make you suspicious. All of those things cant work equally well! If buying from other banks would push the price up, or down, then selling to them should push the price down, or up. The fact that the chat room traders sometimes did one, and sometimes the other, means that they hadnt found a reliable cheat, a way to take the risk out of their trading. It means in some sense that their manipulation didnt work. I mean, it worked fine. But theres a reason you cnt teach that. It makes no sense! Try to account for the flows here: The chat room traders had a lot of client buy orders at the fix. They decided to manipulate the price up. They did that either by increasing the amount of buy orders they had at the fix (by reducing the buy orders that outside banks had), or by decreasing the amount of buy orders they had at the fix (by increasing the buy orders that outside banks had), or by doing neither and just putting all their buy orders into the hands of one of them. At the fix, the price went up. Sometimes. Except sometimes it didnt, and then the chat room traders were hosed. I submit to you that no economic activity happened in these chat rooms. The price went up because the chat room traders had a lot of customers who wanted to buy euros at the fix, and no one else had customers who wanted to sell euros at the fix. When the price didnt go up -- when the chat room traders were hosed -- its because other banks did have customers who wanted to sell euros at the fix. The price went up when there were more buyers than sellers, and not when there werent. The market worked. Now this isnt strictly true, not at all. These guys really were cheating. By knowing in advance what their buddies were doing, by concentrating orders in one set of hands, by feeling out the non-chat-room banks, the traders in their chat rooms did get an unfair advantage that allowed them to feel comfortable trading in inefficient ways that did push the price around more than pure supply and demand would dictate. But this isnt Libor manipulation, where they just made stuff up. This is tinkering at the edges of real supply and demand. And it helps to explain why their profits seem to have been relatively modest and inconsistent. There was only so much they could do. And sometimes they just got it wrong. (Also they took out customer stop orders. I guess thats manipulation? I assume that all dealers everywhere are taking out customer stop orders all the time, but, um, FX dealers definitely were!) ................................................................................................................................ Bank based Instruments such as Forex, Bonds, Commodities, Metals, Global Stock Indexes and high net worth famous Individual stocks are heavily daily manipulated by Manipulators (hired by Banks - Liquidity Provider). Manipulators pretend like Banks Trader, Brokers Dealing desk (Spread Betting daily), Unknown big trading firms linked and cooperated with Liquidity Provider Banks.
Posted on: Fri, 23 Jan 2015 09:10:27 +0000
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